Mike Yorwerth is a man with a complete IT system and matching set of business processes in his pocket. He is Tesco’s director of group technology and architecture and the 'Tesco in a Box' IT package is underpinning the supermarket giant’s push into the US, where the grocery market – worth an estimated £300bn – represents a glittering prize.
"In the UK we’ve got what we think is a world-leading continuous replenishment system, sales-based ordering and very sophisticated forecasting. We've picked that up off the mainframe and ported it out onto Unix. That’s then going to get rolled out to the group."
The company opened its first six US stores – branded as the Fresh & Easy Neighbourhood Markets – last month. The Californian stores are “at the heart of what we’re trying to do”, Yorwerth says, and Tesco has announced plans for another 112 US stores over the next five years.
The Tesco in a Box idea was first developed around four years ago. It was a set of IT systems covering “the standard approach to implementing supply chain management, warehouse management, product price management, point of sale, financials, all the core building blocks”, Yorwerth says.
Tesco in a Box was “essentially a model for the international business”. Tesco already operates 3,200 stores in 12 countries, and Yorwerth says: “As we grow, if a country needs the capability, they put their hand into the box and say, ‘I’ll have one of those,’ rather than going out and searching for an enterprise resource planning (ERP) system.”
"Over the last two years that’s translated into not only a set of IT systems but also a set of business processes. So it’s absolutely an end-to-end set of systems,” Yorwerth says. “It describes planning and building stores, deciding on markets, selecting products, getting through the supply chain to selling to the customers in the shops,” he says.
The operating model includes all the underlying business processes too – “things like management information, financials, people management and IT management”.
Yorwerth explains that the US offered a greenfield site where Tesco could “build all the applications and integration together to create the operating model”, rolling out the entire package of business processes and IT systems all at once for the first time. “That’s the first implementation of the whole model. It’s a bold thing,” Yorwerth says.
Before the California stores opened, “most of the model” had been in place in Turkey – one of Tesco’s smaller markets – but the US will be the proving ground.
“It’s a big thing,” Yorwerth says. “From an IT strategy and enterprise architecture perspective it’s great because it’s something everyone can see.”
Tesco’s business leaders can understand it in business process terms, while “IT guys can understand it because they understand the technology of where we’re going to go”, he explains.
“It’s a very compelling vision because it’s a model we can then roll around the group and it brings all the key performance indicators with it that we can continually improve.”
This is a key element of the operating model – it is not just designed for breaking new ground but for rolling out best of breed IT systems and best practice to all Tesco operations. “It’s rolling to four countries next year, four the year after, then we’ll refresh the ones we’ve done with Tesco in a Box in the meantime as well,” Yorwerth says.
Most of the global group will be running on the operating model by 2010, he adds. That’s quite soon isn’t it? “It is, it’s catching up with us,” he says, laughing.